Favorable Rates Now!

Greenberg Glusker Estate Planning Bulletin

After months of decreasing rates, the Treasury Department recently announced that the interest rates used in a variety of transfer techniques will increase in June 2008 from the near-record lows of May. If you are planning to make any lifetime transfers to either family members or charity, now is an excellent time to explore your opportunities. As a result of these historically low rates, certain types of transactions will generate substantially better tax results for the donor if completed by the end of May.

The applicable Treasury Department interest rates for transactions completed during June of 2008 are higher than the May rates.

Minimum Required Interest

              Discount Rate     3-year note     3-9 year note     9+ year note 
June              3.8%                    2.08%                 3.20%                 4.46%
May               3.2%                    1.64%                 2.74%                4.21%
April              3.4%                    1.85%                 2.87%                4.40%
March           3.6%                    2.25%                 2.97%                4.27%

Because of these higher rates, tax efficient planning for the following techniques, among others, will best be achieved by completing the transaction during May of 2008:

• creating a Grantor Retained Annuity Trust
• loaning money to descendants, or to trusts for their benefit
• selling property to descendants, or to trusts for their benefit, and taking back a note
• creating a Charitable Lead Annuity Trust

The reduced transfer tax benefits can be further leveraged if property with a currently depressed value is part of the transaction. The low rates also continue to adversely affect other techniques, such as the creation of a Qualified Personal Residence Trust, which should therefore be deferred until June (or later).

Please contact us if you would like to explore any of the techniques which take advantage of the low discount and interest rates available through the end of May. In order to utilize the May rates, the transaction must be completed during the month of May, 2008.

Further planning opportunities may arise in the future as the Treasury Department interest rates for each month are announced. Because each month's rates should be published at least one week before the start of that month, there will be an opportunity to determine when it is best to complete any contemplated transaction.

For more information, please contact Laura A. Zwicker, Chair of Greenberg Glusker's Family Wealth Planning Group.